What’s Happening to the Interest on the Opioid Settlement Funds?
By Mary Coyne
Since 2022, states and local governments have received billions of dollars in opioid settlement funds, with more expected in the coming years. While policymakers and advocates have focused heavily on how settlement dollars should be spent, far less attention has been paid to the interest those funds earn while sitting in state and local accounts.
In many cases, opioid settlement agreements and state laws do not clearly specify how interest earnings must be used. As a result, states and localities have been left to decide whether interest dollars should be governed by the same rules as the settlement principal (i.e. the initial deposits from opioid settlements) or by other means. To date, there has been no formalized guidance to states on best practices for how interest dollars can best support local opioid abatement efforts.
The result has been a patchwork of approaches. For example, some states restrict interest to abatement-specific spending, while others fold it into the general fund or direct it towards purposes outside the scope of approved uses outlined in opioid settlement agreements. Each choice carries important implications for transparency, accountability, and the overall impact – and intent – of settlement investments. Notable approaches, and their implications, are outlined below.
Interest is subject to the same restrictions as the settlement principal
A number of states including Maryland, Mississippi, Virginia and Idaho require, by statute or Memorandum of Understanding (MOU), that all interest earnings on opioid settlement funds remain in the same designated fund as the underlying settlement dollars, subject to the same restrictions as the principal (including how they are governed and who administers them). Other states, such as Colorado, have issued statements clarifying that interest dollars earned on settlement funds are considered “Opioid Funds” under their MOU and must be used accordingly. This ensures interest earned is invested in activities that reflect the intent of the opioid settlement funds.
Interest funds made available for non-abatement purposes
A second group of states treat interest earnings as available for purposes that fall outside what’s considered an allowable use of opioid settlement funds. In these cases, principal is bound to opioid abatement purposes, but interest revenue is not.
The State of Ohio, which receives 15% of Ohio’s opioid settlement funds (55% of the funds are governed by the OneOhio Recovery Foundation, and 30% go directly to local governments), limits its definition of “Opioid Funds” to the funds directly received in their settlement – it does not include revenue earned or interest accrued on those funds. Instead, interest earnings on the state’s share of settlement funds are governed by Ohio Revised Code 113.09. By default, this means interest earnings are swept into Ohio’s General Revenue Fund (GRF) and are not guaranteed to be utilized for opioid abatement activities.
In Pennsylvania, the distinction is drawn even more explicitly. The Board of Trustees, which governs the Trust that Pennsylvania’s settlement funds run through, has recommended that no more than 3% of funds are used towards abatement-related administrative expenses. Earned interest, by contrast, can be spent on general administrative expenses —the very category the principal is barred from funding.
New York shows this gap can exist even in a state built to close it. New York established a dedicated settlement account specifically to keep the state’s share tied to abatement purposes, and the statute governing that account reflects the intent. However, the rules were written for the principal – interest was never explicitly expressed – and New York’s proposed FY2027 executive budget could allow settlement fund interest to be directed towards non-opioid abatement activities.
Only interest is spent, with the opioid settlement principal reserved
A third approach treats settlement dollars less like a spending account and more like an endowment: principal is preserved, and only interest is available for appropriation. Two states, Utah and New Mexico, have established laws that limit annual spending of state settlement dollars to interest earnings while retaining settlement payments received as principal. Utah passed a bill in 2025 that converted their opioid litigation account into a restricted fund, making it such that only income earned from the fund (i.e. interest) could be appropriated by the Legislature. New Mexico has adopted a similar approach by limiting annual spending to “income” from the fund – i.e. interest earnings – while keeping the settlement principal preserved. Under this approach, only a fraction of both Utah and New Mexico’s settlement money can be spent on abatement activities in a given year. For example, of the roughly $17 million in opioid settlement funds Utah is projected to receive in FY2027, the state expects to make only about $3 million available for expenditure that year.
Recommendations for aligning approaches to interest with Principle 1 (Spend the Money to Save Lives)
Many of these approaches reflect genuine efforts by state and local governments to be good stewards of settlement funds. But states that direct interest toward non-abatement purposes or restrict abatement spending to interest alone should consider whether or not these approaches honor the settlement’s original intent and their consistency with Principle 1.
Settlement dollars exist because of the extraordinary harm caused by the opioid epidemic and the lives it took. They represent a rare opportunity to make systems-level change across the entire continuum of addiction and recovery, which has historically been and continues to be underfunded. Principal and interest alike, these dollars exist to save lives.
For states that allow interest to be used for non-abatement purposes
States and localities are managing tight budgets under shifting federal support and competing demands. Without explicit requirements governing settlement interest, those dollars have the potential to become a flexible funding source that states and localities may be tempted to utilize for purposes outside of abatement spending. At the same time, settlement funds are both finite and time-limited. Directing both principal and interest toward abatement activities maximizes what these dollars can accomplish and is the approach most consistent with Principle 1, which emphasizes the importance of ensuring “dollars from any opioid related settlements are additive to existing efforts.”
For states that allow an interest-only spending approach.
Sustainability is an important consideration when managing settlement funds. Interest-only spending is an approach on one extreme that substantially limits the ability to make investments that address urgent needs. Alternatives include preserving a portion of principal to support long-term sustainability without prohibiting principal spending altogether. Another approach is to invest in efforts to create lasting capacity for existing or new programs, such as focusing on infrastructure or service expansions that can ultimately be supported in the long-term through Medicaid reimbursement.
Mary Coyne served as the founding Executive Director of the Maine Recovery Council and holds an M.S. in Addiction Policy and Practice from Georgetown. Her work focuses on the space between policy and implementation—translating public investments into programs that actually work on the ground, change community conditions, and help to save lives.